Apple shares slumped in pre-market trading after investment firm Jefferies downgraded the tech giant to underperform from hold, citing the reported cancellation of its anticipated all-glass iPhone due to low production yields. According to Jefferies analyst Edison Lee, abandoning the ambitious hardware project delivers a significant blow to the company’s hardware revenue strategy, prompting the firm to lower its price target to $263.66 from $285.56 and reduce its fiscal year 2028 earnings per share forecast by 2.1%.
Jefferies Downgrades Apple Stock Over Canceled Hardware
Wall Street sentiment on Apple faces fresh headwinds as analysts reassess the company’s hardware roadmap. According to a note issued to clients by Jefferies analyst Edison Lee, supply chain checks indicate that Apple scrapped its all-glass iPhone, which was slated for a September 2027 debut, due to low production yields. The investment firm lowered its rating on the stock to underperform from hold and reduced its price target to $263.66 from $285.56, implying a nearly 16% downside from Friday’s closing price. Shares edged down more than 1% in pre-market trading following the announcement, though the stock remains up roughly 15% for the year.
Additional reporting from Hyperdash News corroborates that the firm also cut its financial estimates for fiscal years 2028 and 2029. Prior to the downgrade, Jefferies noted that Apple’s valuation had already priced in an overly bullish outlook for its device lineup. The latest move runs counter to broader Wall Street consensus compiled by LSEG data, which shows that 30 out of 47 covering analysts still maintain a buy or strong buy rating on the stock, while only three shops carry an underperform rating.
Impact on Average Selling Prices and Profit Margins
The cancellation of the all-glass device undercuts Apple’s efforts to lift average selling prices (ASPs) and protect profit margins against mounting component expenses. Lee stated that the plan was to scale the all-glass features into future iPhone Pro and Pro Max models to drive higher revenue per unit. Instead, manufacturing hurdles have forced a strategic retreat.
Did you know? Average selling prices serve as a critical metric for hardware manufacturers seeking revenue growth in saturated smartphone markets where unit shipments remain relatively flat.
“We view this as a major setback to efforts to bring in higher-priced iPhones amid soaring memory costs,” Lee wrote in his note to clients. The setback leaves the company heavily reliant on alternative form factors to command premium pricing from customers.
Foldable iPhone Projections and Soaring Memory Costs
With the all-glass device off the table, the upcoming rollout of Apple’s first foldable iPhone in September 2026 stands as the primary near-term catalyst for boosting hardware margins. However, market watchers warn that economic headwinds could dampen its commercial success.
Widening artificial intelligence adoption continues to drive up memory costs across the tech sector. Lee cautioned that these surging expenses could push the starting retail price of the foldable iPhone past $2,000. Such a steep entry point risks turning the device into a niche product with restricted sales volume, ultimately limiting potential upside for Apple stock.
Frequently Asked Questions
Why did Jefferies downgrade Apple stock?
Jefferies downgraded Apple to underperform from hold and cut its price target to $263.66, citing supply-chain checks that revealed the cancellation of the September 2027 all-glass iPhone due to low yields.
What is Apple’s next major hardware release expected to drive margins?
According to Jefferies, the company’s first foldable iPhone, slated for September 2026, serves as the primary near-term driver for higher average selling prices and profit margins.
How does the Wall Street consensus compare to Jefferies’ rating?
Jefferies’ pessimistic outlook runs counter to the broader Street consensus. LSEG data shows that 30 of the 47 analysts covering Apple maintain a buy or strong buy rating, with only three firms holding an underperform rating.
What factors are affecting smartphone production costs?
Surging memory costs, fueled by widening artificial intelligence adoption across the industry, are driving up component expenses for next-generation mobile devices.
What are your thoughts on Apple’s hardware strategy and the impact of rising memory costs? Join the conversation by leaving a comment below, explore more financial market updates, or subscribe to our newsletter for daily equity insights.
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